Private finance initiative

The private finance initiative (PFI) was a United Kingdom government procurement policy aimed at creating "public–private partnerships" (PPPs) where private firms are contracted to complete and manage public projects.^[1] Initially launched in 1992 by Prime Minister John Major, and expanded considerably by the Blair government, PFI is part of the wider programme of privatisation and financialisation, and presented as a means for increasing accountability and efficiency for public spending.^[2]

PFI is controversial in the UK. In 2003, the National Audit Office felt that it provided good value for money overall;^[3] according to critics, PFI has been used simply to place a great amount of debt "off-balance-sheet".^[4] In 2011, the parliamentary Treasury Select Committee recommended:

"PFI should be brought on balance sheet. The Treasury should remove any perverse incentives unrelated to value for money by ensuring that PFI is not used to circumvent departmental budget limits. It should also ask the OBR to include PFI liabilities in future assessments of the fiscal rules".^[5]

In October 2018, the Chancellor Philip Hammond announced that the UK government would no longer use PFI for new infrastructure projects; however, PFI projects will continue to operate for some time to come.